Introduction and conclusion--company is apple inc.

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Part 1: Overview of the company 

The Selected Company is Apple Inc. Apple Inc. is an American multinational organization which focuses on the sale of consumer electronics, software and online services. The company is a hardware and software organization which is mostly known for the series of smartphones, laptops and other devices and this is because the company stands out in the operating system for the devices and the quality of the products. The company has various branches and its headquarters are in Cupertino California, United States. The current market price per share for the company according to Nasdaq is $161.62

Part 2: Income statements 

From the income statements for the company for the past 3 years, there are various trends that can be observed. Looking at the sales of the company they have been showing a growth for the past three years. The sales growth for the year 2021 was 33% from the year 2020 and in 2020 the sales had grown by 5% from the previous year.The operating income was highest in 2021 when compared to the previous two years and this shows that despite the negative impact on the economy by the ongoing pandemic the business has been able to grow its profits (Jackson, 2021) The net income for the year 2021 was $94.68billion, 2020 was $57.41 billion and for 2019 it was at $55.26 billion.

· Summarize key trends in revenues, operating income, and net income over the last 3 years.

Part 3: Common size income statements 

The common size income statement offers a trend for the revenues of the company, operating income and the net income for the last 3 years. The common size income statement shows that the sales have been growing over the three years. In the common size statements the operating income for the year 2021 takes the larger proportion 29.78% while the lowest is in 2019 which is 24.57% and this shows that the company has been increasing the amount made on its operations. The net income also has the highest value in 2021 as it is recorded as 25.88%. The net income decreased in 2020 and later went up in the year 2021.

Part 4: Balance sheets 

The total assets for the company were at 338.52 billion in 2019, then went down to 323.89 billion and later increased to 351 billion in the year 2021. The company’s current assets however show a negative trend over the last three years; they have been decreasing as they were at 162.82 in 2019 but by 2021, they had gone down to 134.84 billion. The current liabilities increased slightly in 2020 and showed a big increase in 2021. The long-term debt has showed a positive trend over the last three years and that is not good for the businessRobinson, (2021). The company’s shareholder equity has decreased over the last 3 years.

Part 5: Common size balance sheets 

Looking at the common size statement, the current assets were 48.10 % of the total assets which was the highest in the three years. The total current liabilities were at 31.23% of the total assets for the year 2021 which was the lowest in the three years and this is good as it shows that the company’s financial obligations are decreasing. The long-term debt has also decreased over the last three years and this is a good sign as well (Jackson, 2021) The percentage of shareholders equity is higher which means that the company has more equity and that is good for the business as it lowers the financial leverage.

Part 6: Cash flow 

Simple cash flow = Cash flow from operating activities + Cash flow from investing activities + cash flow from financing activities.

= 104, 038 +(14,545) +(93,353) = (3860) million – 2021

=80,674+ (4289) +(86,820) = (10,435) million – 2020

=69,391+ 45896+(90,976) = 24,311 million- 2019

The company had positive cashflows in 2019 but in 2020 and 2021 the company had negative cashflows with 2020 being the worst year and that could be because of the impact of the pandemic on the economy. The net operating cashflow from the statement of cashflows for the past 3 years is higher compared to the simple cashflow computed.

Part 7: Financial analysis conclusion: 

Item	Strength/ weakness
Income statement	Strength
Balance sheet	Weakness
Common size income statement	Strength
Common size balance sheet	Weakness
Cashflow	Weakness

The company’s balance sheet and common size balance sheet can be categorized as a weakness and this is because the liabilities for the company increased over the last 3 years while the equity decreased and that increases the financial leverage of the company. The common size income statement and income statement are a strength and this is because the company made more sales in 2021 compared to previous year. The profit margins also showed a positive trend(Easton et al., 2018). The cashflow is a weakness because the business has negative cashflows. The company’s overall financial strength is strong because it has high volume of revenues and profits.

References

Easton, P. D., McAnally, M. L., Sommers, G. A., & Zhang, X. J. (2018). Financial statement

analysis & valuation. Boston, MA: Cambridge Business Publishers.

Jackson, A. B. (2021). Financial statement analysis: a review and current issues. China

Finance Review International.

Robinson, T. R. (2020). International financial statement analysis. John Wiley & Sons.